The FMA’s proposed guidance sets out 10 key principles for keeping proper accounting records, along with specific considerations and evidence required for making judgements and estimates when preparing financial statements.
In a joint feedback, CA ANZ and CPA Australia support the FMA’s draft guidance. In our view, the maintenance of proper accounting records is fundamental to high quality financial reporting. We do not believe the proposed guidance introduces new practices or additional requirements. Rather the proposed guidance adds structure and clarity to the existing requirements.
However, we recommended the following further improvements to the draft guidance:
- The principles be positioned according to priority.
- Additional guidance be added to support the principle ‘Sufficient, supportable and reliable’ to ensure the records are fit-for-purpose.
- Additional guidance be added to support materiality judgements, for example qualitative factors to be considered when arriving at quantitative materiality thresholds (e.g., related parties).
- While we welcome the reference to IFRS Practice Statement 2 Making Materiality Judgements we believe it should be given more prominence by elevating it from a footnote to the body.
- Clarification that the entity’s accounting records should include sufficient information to assess its ability to continue as a going concern.